Bill proposes incremental raises in Utah’s minimum wage

ST. GEORGE — Millions of workers across the nation received a raise as 2017 was ushered in following sweeping changes in 21 states’ minimum wage laws, including four states where the increase will take place later in the year. But not in Utah, where minimum wage remains at the federally mandated level. However, a bill introduced last week to increase minimum wage may change that if passed.

As of January, 29 states have minimum wage levels higher than the federal standard of $7.25 an hour.

In Utah, minimum wage is $7.25, but employers can pay minors $4.25 an hour during their first 90 days of employment. Tipped employees can be paid $2.13 an hour as long as the tips earned raise them up to the minimum wage.

To address the fact that Utah is in the bottom half of the country for minimum wage levels, Salt Lake Rep. Lynn Hemingway proposed HB 147, entitled “Living Wage Amendments.”

Politicians, business owners, workers, taxpayers and governments all have a stake in this issue, as it influences many aspects of public and private life – from employment to consumer prices to demand for social services.

Hemingway’s bill calls for annual incremental increases in the state’s minimum wage, with a proposed increase to $10.25 effective on or after July 1, 2017. Subsequent annual increases would take effect each July 1, capping at $15 in 2022.

The bill also proposes to raise the minimum wage for tipped employees from $2.13 per hour to $5 per hour, along with future wage increases.

“The fact is I’ve run this bill now for four years, ” Hemingway said, “because we have so many workers in the state that make minimum wage, which places them well below poverty level.”

The federal poverty level is the set minimum amount of gross income that a family needs for food, shelter, clothing, transportation and other basic needs.

In the U.S., this level is determined by the Department of Health and Human Services and varies according to family size. That number is adjusted annually for inflation, and the revised guidelines are typically released in late January.

Hemingway said he made several changes to the bill this year in the hopes that it will finally make it out of committee.

One of the arguments Hemingway said he hears often is that minimum wage doesn’t need to change because a majority of those who earn minimum wage are teenagers still in high school or students earning extra money. Hemingway disagreed, citing U.S. Department of Labor statistics

“In fact, 89 percent of those who would benefit from a federal minimum wage increase to $12 per hour are age 20 or older, and 56 percent are women,” According to the U.S. Department of Labor:

There are similar findings within the Utah workforce as well, Hemingway said, where a majority of poverty-level workers are 20-30 years old.

Government statistics show that the Utah workforce comprises 132,000 low-wage workers.

“At the rate of $7.25 an hour, they would have to work two full-time jobs to afford an average two-bedroom apartment in Utah,” he said.

Others argue that raising the minimum wage will hurt the economy, Hemingway said, and people will lose their jobs. However, Labor Departmentresearch suggests that instead of weakening the economy through an increase in unemployment, there is actually a “small stimulative effect” on the economy as minimum wage workers spend more, which raises both demand and job growth.

“Each year the opposition comes from the business community who feel that they don’t want to raise the minimum wage,” Hemingway said. “They think they will lose money.”

But Hemingway said they are going to pay for it one way or another. As it stands now, minimum wage income typically qualifies a family of three for medical benefits, food stamps and other government programs necessary to fill in the gap, Hemingway said, and even this only takes the family of three up to federal poverty level guidelines.

“Every taxpayer pays when the state maintains a minimum wage of $7.25 an hour,” he said, “so businesses are already paying more – everyone is paying for this.”

Despite perceived opposition, a 2015 survey conducted by Polling Public Policy found that 3 out of 5 small business owners support a gradual increase in the minimum wage to $12 by 2020, keeping closely in line with Hemingway’s proposal.

However, some business owners say it isn’t as simple as just raising the minimum wage; there is actually a ripple effect. Bill Sherwin, who has owned several businesses in St. George, said that good employees are an asset to any company and can be hard to come by.

One way to keep a good employee is to pay above the minimum wage, he said, which attracts them initially and gives them a reason to stay. However, once the state minimum wage is raised, it can remove that incentive unless the pay of tenured employees is also increased, which raises employee costs across the board.

So the only two options that business owners have is to either pass that cost onto the consumer, Sherwin said, or to take a hit in the profit margin.

“The money to pay a higher wage has to come from somewhere,” he said.

For many business owners, it is their own money that’s on the line, Sherwin said. So if the cost of doing business goes up, the profits go down. At a certain point it’s no longer feasible to keep the business going, he said, but closing comes at a tremendous cost.

Cedar City businessman and District 28 Sen. Evan Vickers agrees.

“When a minimum wage increase is forced through legislation, there will be businesses that are unable to absorb that expense,” Vickers said.

Vickers also said that this type of wage increase is artificial and can trigger a hike in the cost of goods and services, which can eliminate the value of the wage increase.

Southern Utah Rep. Jon Stanard – who is also the vice president of the House Rules Committee, where Hemingway’s bill is currently – shared similar views.

Stanard said the job market is experiencing a rise in wages presently that is being driven naturally by low unemployment and competition for labor, even for entry-level positions.

“I don’t believe that employers necessarily need a legislative wage increase to pay their employees more,” he said, “because many of them are doing that on their own.”

Since the establishment of the Fair Labor Standards Act in 1938, the federal minimum wage has been increased 22 times, and for more than 79 years the country’s Gross Domestic Product has steadily increased, unaffected by wage increases. However, despite rising inflation, the federal minimum wage has remained unchanged since 2009.

“I’ll continue the fight,” Hemingway said, “and I won’t stop until the bill is approved, no matter how many times it takes.”

HB 147 “Living Wage Amendments” is currently in the House Rules Committee, awaiting the return of a fiscal note that was sent to Hemingway and fiscal analyst Sean C. Faherty on Jan. 29. The fiscal note process determines the fiscal impact of a bill, and finds any budget problems before the bill proceeds.

Copyright St. George News, SaintGeorgeUtah.com LLC, 2017, all rights reserved.

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About the Author

Cody Blowers was raised in South San Francisco, California. A 2013 graduate of Colorado Technical University, Cody earned her bachelor’s degree in criminal justice with a minor in paralegal studies. Through the course of her academic studies she discovered that writing is her true passion, and she is committed to providing credible, integrated news coverage. Cody joined St. George News in 2015, and when she’s not busy chasing the news, she can generally be found chasing her young granddaughter, Kali.